Friday, August 31, 2012

Kuwait's state owned oil fund is seeking a joint venture with Athabasca oil in the oil sands. The deal will be for about $4 billion and is expected to be finalized by October

Kuwait Petroleum Corp. the state-owned oil company has signed a memorandum of understanding that would see the company invest around $4 billion in a joint venture with Athabasca Oil Corp. The venture would develop some of Athabasca's properties in the northern Alberta oil sands.

The agreement was confirmed by the Kuwaiti ambassador to Canada Ali al-Sammak. The final agreement is expected by October. Al-Sammak said in a telephone interview."..

“It’s a plus-or-minus $4-billion deal and in October they’ll be coming back to follow up what has been signed....So we’re doing very good – this proves that we’re good close friends.”

Sammak said Kuwait Petroleum wants to diversity its operations beyond the Middle East and also gain access to oil sand extraction technology as Kuwait too has heavy oil fields.

Many foreign-owned and state-owned oil companies seek to invest in Canada's energy resources. The Conservative government has encouraged this as a means to diversity the sources of capital and also capture new markets. Recently Chinese state-owned CNOOC has offered 15 billion for Calgary-based Nexen. Another deal involves Petronas of Malaysia who offered $6 billion for Progress Energy Resources Corp. Progress shareholders have approved that deal. Trading in Athabasca's stock was suspended on Friday before the news of the deal was announced.

These deals are just part of a host of pending foreign investments in the rich energy resources of Canada. Companies both state-owned and private from South Korea, Russia and many emerging Asian countries are negotiating with Calgary-based companies.

Many of the companies involved want the Conservative government to make its policy with respect to investment clearer. While there is a review to determine whether an investment is of net benefit to Canada, the exact criteria are not clear.

Wikimedia Commons

Map of oils sands in Alberta, Canada. The three oil sand deposits are known as the Athabasca Oil Sands, the Cold Lake Oil Sands, and the Peace River Oil Sands.

Some within the Conservative government do not want to treat aggressive state-owned corporations on the same footing as private companies since these companies may not act on purely market principles. These companies include not only Chinese state-owned companies but those of Malaysia and Kuwait as well. Immigration minister Jason Kenney is one of those critics although he would make an exception for Norway's Statoil since it is run on market principles. I find it odd to talk of oil producers and market principles.After all many oil producers belong to OPEC whose whole purpose is to manipulate the market and influence prices. The aggressive nature of the state oil companies Kenney fears often result in high prices for shares that shareholders could never expect in the market.

The spate of negotiations in Calgary are not simply the result of foreigners anxious to invest in Canadian resources. Canadian companies themselves are actively seeking out these investments since they themselves lack the capital to finance expensive and often risky oil sands projects.

Athabasca for example has acquired many properties and now has 1.6 million acres in the oil sands but not the capital for development. Athabasca was able to develop the Dover and Mackay River properties only after it raised $1.9 billion by selling a 60% stake to PetroChina International Investment Co. which is state-owned.

The Canadian Association of Petroleum Producers predicts it will cost $23 billion to produce oil sands oil in 2012. By 2020 this amount could more than quadruple to $100 billion. This amount of capital is just not available within Canada. Canada needs both foreign capital for development and foreign markets for the oil. However, Canada might be better off it concentrated more on developing in other areas rather than simply being a convenient sources for raw materials to fuel the value adding industries of other countries. Oil and natural gas do not go bad if left in the ground, they might just increase in value.

Production in the oil sands in particular present many dangers to the environment. The costs of environmental damage will probably fall on the Canadian taxpayer rather than investors foreign or otherwise.

Thursday, August 30, 2012

An article in Fortune by Joel Kotkin claims that there is an unseen class war that could decide the presidential eletion. Unfortunately Kotkin does not define "class". The hidden conflict he ultimately describes is not between classes but at most two strata of the middle class using "class" simply to refer to income levels.

Historically the two main theoretical views of class are those of Karl Marx and Max Weber. Put very simply the Marxist theory of class is as follows:

In Marxist theory, the class structure of the capitalist mode of production is characterized by the conflict between two main classes: the bourgeoisie, the capitalists who own the means of production, and the much larger proletariat (or 'working class') who must sell their own labour power

Note that this is a theoretical concept and is used to explain the basics of how capitalism operates.Class is not determined by income as in the common usage of the term in much discourse now. Max Weber thought that the Marxian concept of class was too narrow. Weber's position can be summarized as follows:

Class: A person's economic position in a society. Weber differs from Marx in that he does not see this as the supreme factor in stratification. Weber noted how managers of corporations or industries control firms they do not own.

Status: A person's prestige, social honor, or popularity in a society. Weber noted that political power was not rooted in capital value solely, but also in one's individual status. Poets or saints, for example, can possess immense influence on society with often little economic worth.

Power: A person's ability to get their way despite the resistance of others. For example, individuals in state jobs, such as an employee of the Federal Bureau of Investigation, or a member of the United States Congress, may hold little property or status but they still hold immense power.

The common usage nowadays however lacks any theoretical role but refers mostly to levels of income: There is a very powerful and rich upper class owning much of the means of production. Next there is large middle class of professional workers, small business owners, and managers who have a middle range income level and finally the lower class that would include workers in jobs that do not pay much and others with little income. Kotkin uses the term class in his article in this common usage sense. His first two sentences make this clear:

Much is said about class warfare in contemporary America, and there’s justifiable anger at the impoverishment of much of the middle and working classes. The Pew Research Center recently dubbed the 2000s a “lost decade” for middle-income earners — some 85% of Americans in that category feel it’s now more difficult to maintain their standard of living than at the beginning of the millennium, according to a Pew survey.

Kotkin notes that there is no true class solidarity among the rich since no one threatens their status. How true? In terms of Marxian class concepts the presidential election involves a system where those who must sell their labor to live do not threaten the rich capitalists who hire them. The system ensures that class conflict is limited to a choice of the representative of capital who may preserve some of working class benefits and rights, the Democrats, and a representative who would tend more to taking some away. The system is meant to channel class conflict into a system that ensures the capitalist class in general is not threatened. Both parties are beholden to large corporations and capitalist interests that provide them funds for their expensive campaigns.

Kotkin points out that Obama enjoys support from financial interests that benefit from government debt and stimulus programs and also "green" capitalist entrepreneurs as well as Silicon Valley capital. Microsoft and Google are big Obama supporters. Republicans depend upon oil, coal and gas and energy industries that are often unpopular generally. What Kotkin has shown is that there is conflict among certain strata of the capitalist class. He dismisses this as showing that the action is not really there. This does not seem to follow. It will be important for these strata who wins out in the election.This is precisely why the oil and coal capitalists put more money into the Republican than Obama campaign and green industries donate more to the Obama campaign.

Kotkin concludes that the real class war is going on lower down "the economic food chain". Kotkin next invents a name "the clerisy" which includes: lawyers, teachers, professors, media, and public sector workers. This is not a class in any sense of the word but simply a strata most being in the middle class and some perhaps even in the lower class. Anyway this group apparently adores Obama. This class thrives on government payouts and hence is for larger government and more government programs that improve their situation. This is, according to Kotkin, a new privileged class who live high on the hog. Of course most of the media are privately controlled and not government subsidized. It is not clear how office workers in media giants are somehow living high off the hog. Kotkin obviously has a right wing slant to his analysis:

Essentially, the clerisy has become a new, mass privileged class who live a safer, more secure life compared to those trapped in the harsher, less cosseted private economy. As California Polytechnic economist Michael Marlow points out, public sector workers enjoy greater job stability, and salary and benefits as much as 21% higher than of private sector employees doing similar work.

So the class conflict is between a privileged strata including unionized workers and what he calls the Yeoman Class..

The GOP, for its part, now relies on another part of the middle class, what I would call the yeomanry. In many ways they represent the contemporary version of Jeffersonian farmers or the beneficiaries of President Lincoln’s Homestead Act. They are primarily small property owners who lack the girth and connections of the clerisy but resist joining the government-dependent poor. Particularly critical are small business owners..

However Kotkin goes on to claim that the Yeoman Class contains people in farming, fishing, forestry, transportation, manufacturing and construction. This is what Kotkin calls actual production. Yet Wall Street is the biggest supporter of Romney this time around and Romney's experiences with Bain Capital are hardly Yeoman in character. One could mention too that farmers among other yeomen jealously protect their government subsidies and when disaster strikes request help from government.

Kotkin thinks that this conflict between clerisy and yeomanry will settle the battle. Although Kotkin is clearly on the side of the yeomanry he fears that Obama has the tactical advantage. While Kotkin may have broadly identified important target groups for the competing campaigns the conflict he describes has little to do with class conflict but conflict within certain strata within the middle class. This conflict is just one among many that may determine the results.

In Marxian class terminology the strata that Kotkin identifies as the Yeoman class is somewhat akin to that of the petite bourgeoisie who hire workers while working themselves and hence have an ambiguous relation to the means of production and the capitalist class. As hiring workers they may tend to oppose labor rights and minimum wages but they may themselves be exploited by large capitalist suppliers and subordinate relationships to big corporations. The group also has to face expensive paperwork due to government regulations. Hence they may express anger at the power of both large corporations and big government.

According to an account of Bin Laden's death in a new book by a Navy SEAL involved in the raid, Bin Laden was shot as he poked his head out a bedroom door. This contradicts the official version which claims he was shot afterwards.

The official U.S. administration version of the raid on Bin Laden's compound in Abbottabad Pakistan is that the Navy SEALs shot bin Laden only after he had ducked back into the bedroom. The SEALS assumed that he might be reaching for a weapon and so shot him on opening the door.

"As President Obama said on the night that justice was brought to Osama bin Laden, 'We give thanks for the men who carried out this operation, for they exemplify the professionalism, patriotism and unparalleled courage of those who serve our country."'

This is typical of official political commentary these days. It does not respond to the question but is meant to elicit the proper positive response from the public.

Navy SEAL Matt Bissonnette writing under the pseudonym Mark Owen wrote his own account of the Bin Laden raid in his book No Easy Day. The book is to be published next week under the Dutton imprint by Penguin (USA). Bissonnette claims that he was directly behind the "point man" as they climbed the stairs. Less than five steps from the top Bissonnette heard gunfire. The point man reportedly saw a man peeking out the door on the right of the hallway.

When Bin Laden ducked back in to what was a bedroom the SEALS followed. Bin Laden was crumpled on the floor in a pool of blood. There was a hole visible on the right side of his head and two women were wailing by the body.

The SEALs shoved the women away into a corner and then trained their sights on Bin Laden's still twitching body and shot him several times until he remained motionless. Later two weapons were found by the doorway but they had not been touched. This story would seem to confirm what many analysts had already thought. The aim of the mission was simply to kill Bin Laden and that during the raid Bin Laden had not been a threat to the SEALS.

Bissonnette however claims that before the raid a lawyer informed them that they were not on an assassination mission. Bissonnette maintains that the lawyer said that if Bin Laden were not a threat they should "detain hiim". Yet Bissonnette's account shows that Bin Laden was not a threat when they finished him off. Perhaps the SEALS decided that being so badly wounded it was best to make sure Bin Laden was dead.

Another part of Bissonnette's account concerns treatment of the body. Bissonette claims that a SEAL sat on Bin Laden's chest as the body lay in the middle of the helicopter taking them to a third helicopter inside Pakistan. It should be noted that space was quite limited as one helicopter had crashed at the scene.

Apparently none of the SEALs were Obama fans although they respected him as commander in chief for giving the go ahead for the raid. They were even less enthused about the vice-president Joe Biden.

Bissonnette's book did not have the formal review that the Pentagon requires for any volume published by former or current Defence Department employees. This is somewhat surprising. One would think that publisher's would ensure that this would happen or that all those snoops who are collecting information about everything would alert the Pentagon that the book was to be published.

The author claims he did not disclose confidential or sensitive information that would compromise national security in any way. However, officials from the Pentagon and CIA are apparently checking the book for any disclosure of classified information. Legal action could even be taken against Bissonette. No doubt Bissonette will by then have plenty of money to help pay his legal expenses.

Giving an account of the raid that is at variance with the official version of events seems to me prima facie evidence that Bissonnette has revealed classified information. However prosecution might be too embarrassing for the administration. After all, Bissonnette is one of those patriotic, professionals with great courage whom Obama praised as serving the U.S.

Wednesday, August 29, 2012

While media attention recently has focused on Pakistan and its blasphemy laws, many countries have such laws including Saudi Arabia and Iran. In western countries blasphemy laws have been replaced by hate speech laws that also punish some types of speech.

The arrest of a young Christian girl for allegedly burning pages of a beginner's guide for reciting the Quran has focused media attention on Pakistan's blasphemy laws. Those laws are draconian but they derive more generally from Sharia law and its prohibitions.

There is a certain irony in the strong association of draconian blasphemy laws with Islam. According to Wikipedia neither the Quran nor hadith (sayings) make reference to a crime of blasphemy. It is later jurists who incorporated laws against blasphemy into Sharia law. A lawyer, activist and critic of Pakistan's blasphemy laws, Ayesha Haq says:

"I think it's a bad law to start off with – it's a man-made law and it has nothing to do with religion. If you look at our history, the history of Islam and that of our Holy Prophet - he was exceptionally tolerant to those who were abusive towards him. He never took any action against anyone who did anything horrible to him, like throw garbage on him. So for him to put up with all that and we can't, to me, makes absolutely no sense."

Yet under Sharia law penalties for blasphemy can include fines, imprisonment, flogging, amputation, and death by hanging or beheading. One section of Pakistani blasphemy law states:

“Whoever by words, either spoken or written, or by visible representation, or by imputation, innuendo, or insinuation, directly or indirectly, defiles the sacred name of the Holy Prophet Muhammad shall be punishable with death, or imprisonment for life, and shall be liable to fine.”

There is nothing unique about the Pakistani laws. Similar laws can be found in Sunni Saudi Arabia and Shia Iran. Again somewhat ironically laws governing criticism of Muhammad or Islam are often used against minority Muslim sects as well as adherents of other religions.

In 2008 in Saudi Arabia Ra'if Badawi ran a website that was critical of the Saudi religious police and also questioned the traditional Wahhabi interpretations of Islam. He was charged with setting up a site that insults Islam. Badawi was faced with possibly 5 years in prison and an $800,000 dollar fine. He fled the country.

In 2007 Sabri Bogday, a barber from Turkey, confessed to swearing at Allah and was sentenced to death. Two appeals were denied but eventually after Bogday appealed to King Abdullah and expressed repentance while asking Allah for forgiveness the king allowed his appeal and Bogday returned to Turkey.

Iranian blasphemy law is based on Sharia law but from a Shia perspective. Critics claim it has been used against minorities such as the Sufis, Bahai, and even opposition journalists or politicians. Here are two illustrative cases from Wikipedia.

In June of 2009 singer Mohsen Namjoo was sentenced in absentia to a five-year jail term for ridiculing the Quran in a song even though a year earlier Namjoo had apologized for the song and claimed it was never meant for public release. Perhaps the most famous use of blasphemy laws was the fatwa issued against the novelist Salman Rushdie.

In 1989 the Ayatollah Khomeini issued a fatwa calling for Muslims to kill Rushdie and his publishers of the satirical novel the Satanic Verses for insulting Muhammad and Islam. While Rushdie has so far escaped punishment his Japanese translator was stabbed to death in 1991. The Italian translator also was stabbed but survived.

While in many western countries blasphemy laws have disappeared there are in many countries hate speech laws which criminalize certain types of speech. Hate speech laws are much broader than blasphemy laws which are connected to religion. Groups protected against hate speech include the disabled, ethnic minorities, religious groups, those of a particular gender or gender identity, those of a particular sexual orientation and no doubt others as well. Many countries,although not the United States, have such laws. However even more countries, including the United States, have hate crime legislation that in effect adds seriousness and punishment to existing crimes that are motivated by hate. All of these types of laws can be misused to stifle opposition and certainly they impose a type of political correctness on citizens.

Tuesday, August 28, 2012

In another "green on blue" attack an Afghan National Army soldier shot dead two U.S. troops in Laghman province. U.S. troops returned fire killing the Afghan.

Afghan officials said that the incident was an accident. They claim the soldier had tripped over his weapon which discharged killing the two U.S. soldiers. However, U.S. officials claimed that it was not an accident but the result of a dispute.

This is the 33rd "green on blue" attack in 2012. Altogether 42 NATO troops have been killed in the incidents. The Pentagon is trying to put a new spin on the attacks by rebranding them as "insider attacks" suggesting they might be Taliban infiltrators or Taliban using Afghan uniforms.

While no doubt those sorts of cases do exist in this instance there is no evidence that the Afghan was an infiltrator.The shooting was apparently the result of some dispute the nature of which has yet to be clarified. Insider attacks have nearly doubled in 2012 from 2011. Already this year 37 Americans have been killed compared with 28 during the same period last year. In a news conference Defense Secretary Panetta said:

"Make no mistake about it, I've been very concerned about these incidents ... because of the lives lost and because of the potential damage to our partnership efforts,"

Gen. Martin Dempsey, chairman of the Joint Chiefs, defended the use of the term "insider attack" calling the "green-on-blue" designation a misnomer. Panetta claimed that the attacks show that the Taliban are becoming desperate. He said:

"The reality is, the Taliban has not been able to regain any territory lost, and so they're resorting to these kinds of attacks to create havoc,"

Panetta is obviously putting a quite positive spin on these attacks. This is a common tactic. Whenever there is some dramatic Taliban attack it is often interpreted as a sign of desperation. For the safety of NATO troops Panetta had better hope that the Taliban do not become even more desperate! Panetta also reminded Americans that the U.S. was still at war in Afghanistan:

"There are a lot of other things going on in this country (the United States) that can draw our attention, from the Olympics to political campaigns to droughts to some of the tragedies we've seen in communities around the country... But I thought it was important to remind the American people ... that young men and women are dying in order to try to protect this country."

Certainly the Afghan war does not surface as much of an issue in the U.S. election campaign. Panetta does not mention that there is an agreement with Afghanistan that will continue the U.S. presence in Afghanistan from 2014 to 2024 in spite of the turnover of security to the Afghans in 2014.

Monday, August 27, 2012

This statement would not doubt be unremarkable if it came from a supporter of Assad's view that his fight is not a civil war but against terrorists. However, the source is Ed Husain a Senior Fellow For Mideastern Studies at the Council on Foreign Relations.
Husain claims that the main rebel force, the FSA (Free Syrian Army) battalions are divided, unorganized and often ineffective. Assad still has far superior armaments and dominance in the air and a professional army. Without outside intervention the rebels are not likely to progress very far unless the Assad regime self destructs from within. However, the Al Qaeda forces in Syria bring discipline and religious fervor to the battle. They are accustomed to fighting vastly superior forces and not at all discouraged by that. They are also often well-funded by wealthy Sunni benefactors from the Gulf oil states who want to see Sunnis regain control of Syria from the Shia Alawites. The Al Qaeda fighters in Syria who call themselves Jabhat al-Nusrah li-Ahli al-Sham (Front for the Protection of the Levantine People) are gaining both in strength and the number of their operations.
In March there were only seven attacks attributed to the group but by June they had carried out sixty six operations including many in the key battlegrounds of Aleppo and Damascus. The group is gaining adherents from the FSA members and also foreign fighters from Libya and Iraq among other countries.
Al Qaeda is not just interested in overthrowing Assad but in establishing an Islamist state in all or part of Syria. Failing that, they want at least to make Syria a safe haven for operations elsewhere such as in Iraq.

As long ago as May U.S. Defense Secretary Panetta admitted Al-Qaeda's presence in Syria. However the U.S.counter terrorism chief Daniel Benjamin said in July that the U.S. would simply ask the Free Syrian Army to reject Al Qaeda. That is probably much easier said than done. When the west supported jihadists against the Soviets in Afghanistan the eventual result was the rise of the Taliban. Something similar could very well evolve in post-Assad Syria. For more see this article.

From 2010 to 2011 U.S. weapons sales tripled to developing countries. U.S. sales constituted more than three quarters of the global market. Russia was the next largest supplier with $4.8 billion in sales.

Although the global economy may be in decline U.S. arms exports increased from $21.4 billion in 2010 to $66.3 billion last year. The next highest level of arms exports was in 2009 at almost $31 billion less than half the amount in 2011.

A New York Times graph shows the percentage of arms transfers to developing countries by a group of countries. In 2010 the U.S. had a 44% share. Russia managed a 24% share and China just 5%. In 2011 the U.S. share surged to 79% while Russia plunged to 6% and China managed only 3%.

Even though times are tough in many places, Persian Gulf nations such as Saudi Arabia, the UAE, and Oman have made huge purchases of U.S. weapons since they have plenty of oil revenues. They worry about what might happen if there were an attack on Iran. Rhetoric about attacking Iran is obviously a great boon for the U.S. military-industrial complex.

The annual report was prepared by the Congressional Research Service of the Library of Congress. This report is thought to be the most detailed arms sales data available to the general public.

Among the Gulf States Saudi Arabia is a huge customer. Last year the country purchased 84 advanced F-15 fighters, ammunition, missiles, and also upgrades to 70 of its present F-15 fleet.

The Saudis also bought dozens of Apache and Black Hawk helicopters. The total bill was $33.4 billion. The Saudis had plenty of money left over to go on a property buying spree in Europe.

. The UAE bought an expensive Terminal High Altitude Area Defense valued at a cool $3.49 billion and 16 Chinook helicopters for almost a billion. Even Oman bought 18 F-16 fighters for $1.4 billion. Israel often expresses worries about such sales but is provided with even more advanced weapons. Of almost $71.5 billion spent by the Gulf States about $56.3 billion was spent in the U.S.

Much to China's annoyance the U.S. also sold Patriot antimissile batteries for almost $2 billion to Taiwan. The U.S. sold India $4.1 billion in transport planes.

The U.S. in 2012 spent $711 billion on arms which is 4.7% of GDP. The U.S. ranks first in the world in spending on arms and has 41% of world expenditures. China is in second place with expenditures of $143 billion or 2% of GDP. Its global share is 8.7%. Saudi Arabia spends a whopping 8.2% of its GDP on arms and a total of $48.2 billion. The military-industrial complex is thriving even though the global economy may be in the doldrums.

Sectarian tension is growing in Libya as two important Sufi religious sites have been attacked in the last two days by Salafist activists.

The Sufis have traditionally been important in Libyan affairs. Sufis practice a form of mystical Islam that stresses individual purtiy of heart and contact with the divine. Wikipedia notes:

Classical Sufi scholars have defined Sufism as "a science whose objective is the reparation of the heart and turning it away from all else but God".[4] Alternatively, in the words of the Darqawi Sufi teacher Ahmad ibn Ajiba, "a science through which one can know how to travel into the presence of the Divine, purify one's inner self from filth, and beautify it with a variety of praiseworthy traits".[5

Salafists are more concerned with strict adherence to what they regard as correct doctrine. Many see the Sufi's as heretics and idolaters since they venerate their scholars and their graves.

An armed group on Saturday bulldozed part of the mausoleum of Al-Shaab Al-Dahman, close to the center of the Libyan capital. This happened just a day after another mausoleum was blown up in Zilten a city 160 kilometers (100 miles) east of Tripoli. Another mausoleum still is reported destroyed in Misrata a port 200 kilometers east of Tripoli.

In the Al-Dahman incident the armed group apparently including government security forces bulldozed the mosque. Allegations had been spread that the Sufis engaged in "black magic". The newly-elected National Congress president said:

"What is truly regrettable and suspicious is that some of those who took part in these destructive activities are supposed to be members of the security forces and from the revolutionaries."

Apparently security forces tried to stop the demolition but after a clash with the armed group the police actually cordoned off the area while the destruction went ahead allegedly to prevent violence! Reuters said it had information that the Interior Ministry gave a green light to the bulldozing apparently because they discovered that people had been worshipping the graves and also practicing black magic! The mosque contained about 50 Sufi graves including that of an important scholar and soldiers who fought against Spanish colonialists.

These incidents show that the new central government is not yet in control and cannot provide security when armed groups decided to enforce their own demands.

Sunday, August 26, 2012

Two of the big names in personal computers Hewlett-Packard and Dell report disappointing sales as new products compete with laptops and desktops.

Not so long ago if you went on line it was through a laptop or desktop personal computer usually. Now people are going on line using smartphones, tablets, and other platforms.

HP(Hewlett-Packard) in the most recent quarter had its worst result since the company was created 73 year ago. Dell also suffered a bad quarter as personal computer sales declined.

No doubt the slowdown in the global economy accounts for some of the decline. Many people may be waiting for Windows 8 to be launched before they buy a new machine. But sales of personal computers have been declining for the past five years.

More and more people are using their smartphones and tablets for on line work. However as Wired points out the situation may not be so much of a slump in performance but a wholesale change in the market with desktops and laptops never regaining their dominance. Sales may never recover since people will be replacing their laptops and desktops by other devices.

Windows 8 may be a great operating system but it will probably only marginally improve sales results. Emerging markets too may help sales but this might very well be offset by even greater declines in sales in mature markets. A research firm IDC forecasts a meager growth rate of less than one per cent in the global PC market for 2012.

In my own case I fear that I will not be helping much to rescue PC manufacturers. My main computer is a 2005 Seanix that uses Windows XP and my backup is another refurbished Seanix of around the same vintage. The company went bankrupt about five years ago. My wife does have a Compaq laptop a few years old running Windows 7 but since we just replaced the hard drive we do not intend to replace the machine. The only bright spot is that a laptop that my step-daughter was using broke down and is not worth fixing. But then she may just use her smart phone or Blackberry tablet.

I will not be buying a smart phone either. My Motorola dumb cell phone has not been activated for several years and should be donated to a technology museum anyway according to my wife. I have always wanted to travel to Finland to compete in the cell phone throwing competition.

After earlier allowing spy agencies to use and share information obtained by torture, the Canada government has now extended the same powers to the national police force(RCMP) and federal border agents.

The Conservative government has been quietly without any notice to the public been changing the rules with respect to information that may have been tainted by torture. The Canadian Press managed to obtain documents from Sept. 9 2011 through the Access to Information Act. The documents are directives to the RCMP and the Border Services Agency. Up until now the documents have remained classified even though this is an important change in policy and one would think should have been discussed in parliament.

CBC asked the officer of the Public Safety Minister's Office about the story from the Canadian Press. CBC asked if the government would use information obtained by torture. A spokesperson for Vic Toews the minister said:. "The minister's directive is clear, the primary responsibility of Canadian security agencies is to protect Canadian life and property..At all times we abide by Canadian law." This is typical evasion but to protect Canadian life and property information which could have been obtained by torture could be used.

These new directives are almost identical to directives issued in the summer of 2011 to apply to the CSIS(Canadian Security Intelligence Service). At the time those directives were criticized by human rights advocates and also opposition MP's as a violation of Canada's obligation to prevent torture internationally.

The U.S. is well known for its former rendition policy that sent terror suspects to countries such as Syria for interrogation and where they were often tortured. The Maher Arar case is a famous instance although the U.S. claims it was not a rendition but a deportation since Arar was a dual citizen of Syria and Canada. Later when supporters of Arar were trying to have him returned to Canada classified material was leaked to a reporter.

Arar's case reached new heights of controversy after reporter Juliet O'Neill wrote an article in the Ottawa Citizen on November 8, 2003, containing information leaked to her from an unknown security source, possibly within the RCMP. The secret documents provided by her source suggested Arar was a trained member of an al-Qaeda terrorist cell.

Someone obviously knows how to use information obtained by torture. An extensive government inquiry found Arar had no links to terrorism. Arar reached a settlement with the government for over ten million dollars. Arar was deported to Syria partly on the basis of raw intelligence data much of it erroneous which the U.S concluded showed he was probably an Al Qaeda operative. One of the recommendations of the Arar Inquiry was that information never be provided to a foreign country where there is a risk that the person might be tortured. However, the U.S. already shared the same view when it deported Arar to Syria. Alberto Gonzales the U.S. attorney general at the time of the Arar deportation noted that Syria had given assurances that Arar would not be tortured. Assad was in power in Syria at that time.

Some of the information used against Arar had been obtained through torture of another terror suspect again in Syria. Canada used what I call opportunistic rendition. Instead of using the U.S. technique Canada waited until a suspect visited a country such as Syria or Egypt and then the person would be arrested. Three Canadian citizens were subject to this practice and ended up in jails in Syria and Egypt. There was a much less extensive and very restrictive inquiry into these cases by Judge Frank Iacobucci. Much of the inquiry was not open even to the lawyers for the three. The inquiry concluded:

Canadian officials had a hand in the torture of Abdullah Almalki, Ahmad El Maati and Muayyed Nureddin in Syria through the sharing of information with foreign intelligence and police agencies.

Canadian officials even helped out by providing questions to Syrian military intelligence. False confessions by El Maati were used to obtain warrants in Canada. This is the way that Canada used information obtained by torture. The three have so far not been able to receive any compensation for their ordeal.

Now the same intelligence agencies and police are given explicit permission to use such information if it is thought necessary for the security of Canadians. The UN Committee on Torture has been critical of the Canadian record. Alex Neve the general secretary of Amnesty International has summed up the main problems as follows:

..

.Canada risks complicity in torture by allowing deportation to torture, denying fair process in security-certificate cases, giving the nod to prisoner transfers in war zones when there is an obvious risk of torture and, under proposed legislation currently before Parliament, restricting appeal rights for refugee claimants who fear torture in their home countries. There is clearly complicity in the ministerial direction to CSIS allowing intelligence information to be shared with other countries even when that might cause torture, and in authorizing the use of intelligence information that was likely obtained through torture in other countries.

Friday, August 24, 2012

The constant refrain from business is that competition is great and the lifeblood of capitalism. Yet the expensive court cases between Samsung and Apple show the opposite. Global capitalism is now to a considerable extent all about patents.

Patents give corporations monopoly rights. These rights prevent competitors from producing products at a lower cost that contain patented features. Patents provide corporations with cash cows that enable them to milk consumers by charging prices that would not exist in a truly competitive market structure.

Even free trade deals are not so much about competition as about restricting competition. Part and parcel of free trade deals are TRIPS(Trade Related Aspects of Intellectual Property Rights). Part of the provisions on patents reads as follows:

Patents must be granted for "inventions" in all "fields of technology" provided they meet all other patentability requirements (although exceptions for certain public interests are allowed (Art. 27.2 and 27.3)[4] and must be enforceable for at least 20 years (Art 33).

In order to enter a so-called Free Trade agreement a country must grant corporations monopoly rights for at least 20 years and allow patents in all fields of technology. It is in this context that the dispute between Apple and Samsung should be viewed. The suit is about the rights of Samsung and Apple to sell products to you the consumer in a manner that restricts competition. The result is that prices for their products will be much higher than if they were being produced in a market without patents. For some reason when business people talk about government intervention in the market, patents are never mentioned. Without governments passing laws to give these rights there would be no patents.

We now have the results of two cases in which Apple and Samsung sued on the basis of patent infringement. In South Korea where Samsung is headquartered the court ruled against Apple's position that Samsung had copied the design of the iPhone. The court also ruled that Apple had infringed two Samsung patents related to mobile broadcasting technology. However, the court also ruled that Samsung had violated an Apple patent. The judge ruled that many of Apple's claims of design patents were not valid since they had already appeared in inventions of Japanese and European countries. As a result of the court decision Samsung will be banned from selling 10 of its products in South Korea and Apple four products.The Korean judge's views on Apple design patents were quite different than those of a U.S. jury.

The U.S. trial took place in San Jose California just a few miles from the headquarters of Apple. The jury found that Samsung had copied key features of the iPhone and iPad and Apple was awarded $1.051 billion in damages. The decision will mean that Apple has successfully limited Samsung's competitive challenge and that sales of some key Samsung products will be banned. The free market triumphs again.

Apple is already the biggest company by market value in history. With the money from the Samsung settlement Apple can file more suits against other companies to further boost their economic rents due to patent monopolies. The result of these trials confirm the importance of monopoly power in modern global capitalism.The costs of ensuring the continued triumph of these powers will be passed on to consumers in the price of Apple and Samsung products.

While the Occupy Wall Street movement has almost disappeared from the media scene one enterprising brokerage company has kept memories of the movement alive by an ad that encourages clients to join the one per cent.

It will soon be a year since the Occupy Wall Street movement on September 17, 2011 occupied Zuccotti Park in the Wall Street financial district of New York. The original source of the movement can be traced to the Canadian activist group Adbusters. The movement soon spread globally to numerous cities both in the U.S. and elsewhere. President Obama voiced support for the movement in a press conference on October 6, 2011:

"I think it expresses the frustrations the American people feel, that we had the biggest financial crisis since the Great Depression, huge collateral damage all throughout the country ... and yet you're still seeing some of the same folks who acted irresponsibly trying to fight efforts to crack down on the abusive practices that got us into this in the first place."

At first Mitt Romney said the protests were dangerous and promoted class warfare but he later recanted somewhat saying:

"I look at what's happening on Wall Street and my view is, boy, I understand how those people feel."

The movement targets such issues as inequality, greed, and the undue influence of corporations on government. The OWS(Occupy Wall Street slogan claimed that they they were the 99% opposed to the ultra-rich one per cent. By November 15, 2011, protesters had been forced out of Zuccotti Park. Over time Occupy encampments in U.S.cities and other cities around the world were closed down. The Movement faded from the media radar.

However, one enterprising brokerage firm, Interactive Brokers, has kept the memory of the movement alive by using the technique of turning an opponent's own highly visible recognition by the public to exactly opposite ends to that of the original movement. I saw the ad on BNN the Business News Network but no doubt it runs other places as well.The ad pictures a protest by stylized figures but the protest is about high brokerage commissions and other issues that concern investors in the stock market. The protesters demand more services, better execution, and lower stock loan rates. The ad promises that you can join the one per cent!

Even the embed code is clever. You get to see, whether you like it or not it would seem, a series of several ads for Interactive Brokers. Fortunately the ad this article is about comes first. Perhaps I should note that I have no connection with Interactive Brokers nor with the one per cent.

Libyan government officials claim that over 100 tanks and heavy weapons were seized from a militia group, the Katibat al-Awfiya, said to be loyal to former Libyan leader Muammar Gaddafi.

A spokesperson for the interior ministry's High Security Committee claimed that as well as the tanks, 26 missile launchers were seized from a barracks in a town 60 kilometers (35 miles) southeast of Tripoli. Authorities said that the militia posed as revolutionaries. A hundred tanks being left to the control of a militia group of any stripe shows how precarious the security situation is in Libya. The central government still does not control many armed groups. One wonders if the group was really pro-Gaddafi or simply in conflict with the central government.

In the raid on the barracks one person was killed and eight wounded. The leader of the militia was arrested. Thirteen others were arrested but three escaped. The same militia had stormed the Tripoli airport early in June to protest what they called the kidnapping of one of their leaders. Air traffic was blocked for several hours until the group was driven out by central government forces. Just imagine that was in June. The same militia was allowed to continue operating and left to control more than 100 tanks.

Authorities admit that security forces have been infiltrated by supporters of the former regime. The National Assembly met yesterday to discuss security across the country. Recently three people died in conflict between rival tribes in the north of Libya. Car bombs killed two people and wounded four in Tripoli. There were also reports of people wounded in a clash in the town of Ziltan south-east of Tripoli.

There are still militia groups throughout the country who are well-armed and are not willing to give up their weapons. The central government seems to be hesitant to try and disarm these groups by force but until they do the government will be held hostage to their demands. The appended video gives some of the background to recent developments in a discussion of the elections about a month ago.

Officials have been warning Canadians to cut back on borrowing as consumer debt levels rose but a report issued by TransUnion today (August 23) shows debt is at record levels.

The report shows average non-mortgage debt of Canadians is $26,221 in the second quarter of 2012. This is an increase of 192 dollars from the first quarter. The Credit Bureau began tracking average consumer debt levels only in 2004. The present level is the highest yet.

This is the second consecutive quarter of growth in the average. The growth in debt is happening across Canada except for a slight dip this quarter in Saskatchewan and Alberta has a decreased annual growth.

Mark Carney has consistently warned that the increasing consumer debt levels are a threat to the economy and that levels are too high. However, in the short term this spending will keep the economy afloat. Thomas Higgins of Transunion said:

“When I look at the recent comments from the Bank of Canada, that they don’t foresee there will be a change in interest rates for 12 to 18 months, and now that some of the media attention on Europe’s issues has died down, I would not be surprised to see the latest rise [in debt levels] continue...Maybe people are thinking that they don’t need to tighten their borrowing too much, that they have a bit of leeway.”

The data used to analyse the data includes credit card debt and car loans, installment loans and lines of credit. Although lines of credit are the largest source of non-mortgage debt, in the most recent quarter the largest increase in debt was for car loans. Higgins suggested that during the recession people put off buying big ticket items. Now the the economy is recovering somewhat they are beginning to buy them again.

In spite of the high levels of debt Canadians are repaying debt. Bankruptcies are at historic lows! However if the economy should take a turn for the worse or interest rates rise many Canadians could fall behind in payments as debt payments became much more burdensome. On the other hand if Canadians all suddenly started paying off their debt warns analyst Ben Rabidoux economic growth could slow.

Jeffrey Schwart of Consolidated Credit Counseling Services warned that Canadians need to include debt repayment and savings in their budget and must learn to live within their means. A Bank of Montreal poll showed that 27% of Canadians between 18 to 34 have not started any savings for retirement. Many Canadians also have no money set aside for emergencies.

Given the constant advertising that produces desires for the latest goods and given often readily available credit with low interest rates it should not be too surprising that many Canadians find themselves unable to save any money from one paycheck to the next. Often each month they may find themselves sliding further into debt.

Thursday, August 23, 2012

In 2011 Egypt rejected a loan from the IMF. The government is now asking for more than $3 billion U.S. from the International Monetary Fund. Egypt asked for a loan earlier this year but the deal fell through.

On Wednesday August 22nd Christine Lagarde, IMF head, met Egyptian Prime Minister Hisham Qandi and President Mohammed Mursi. Lagarde stressed the need for a reform program to solve the economic crisis in the country. Egypt is seeking a loan now from the IMF after claiming in June 2011 that it did not need one.

“The loan in general terms is worth 3.2 billion U.S. dollars. We talked about increasing it up to probably 4.8 and maybe more.”

Lagarde said the amount of the loan had not been settled. Qandi said that Egypt hoped to sign a deal by the end of 2012. The interest rate would be 1.1% and would be payable over five years with a 39 month grace period. Qandi continued:

“This high level visit by the IMF which comes very quickly after new government formation sends a positive message not only to Egypt but to the whole world that Egypt is stable and the Egyptian economy is headed for recovery. We will agree on a timeline and road map that will see a loan agreement signed by November or early December. The government has decided to seek foreign borrowing and the IMF conditions are acceptable to us,”

In spite of the fact that the Islamist Freedom and Justice Party had earlier rejected an economic program associated with an earlier loan of $3.2 billion it appears to welcome this loan. Quandi claims that Egypt will have final say as to how the money will be spent.

A presidential spokesperson praised the IMF and said that a democratic transition would need the support of international institutions such as the IMF. Yasser Ali the spokesperson said that the IMF was not just a funding institution but also encouraged investor confidence in the economy and foreign investment. The conditions for the loan will be discussed in later negotiations. Quite often the conditions are those promoting the global neoliberal agenda including selling off state assets, removal of state subsidies, and cutting back on entitlement programs.

Lagarde naturally put a positive spin on everything saying that the IMF would be Egypt's partner in a journey to restore stability, boost investor confidence, and create jobs. However she also warned that fiscal, monetary, and structural reforms would require determination and political courage. Many of these reforms will be politically unpopular and may help boost opposition parties in the polls.

Leftist protesters massed near the headquarters of the cabinet to protest Lagarde's visit. They condemned the IMF conditions for loans that the protesters claimed benefit only businessmen. They blame the IMF and the World Bank for privatization programs that were carried out under the Mubarak regime. No doubt there will be more of the same. Mursi's economic views are basically neo-liberal and for that reason he is supported by a number of U.S. officials and others in spite of his Islamist views and links to the Muslim Brotherhood.

Wednesday, August 22, 2012

Washington - Award-winning documentary maker Michael Moore and film maker Oliver Stone write in the New York Times on WikiLeaks and free speech.

Michael Moore is a well known left-leaning documentary producer and film maker. Many of his documentaries are critical of U.S. policies. "Sicko" berates the United States health care system. Oliver Stone is also a well known film maker with several films on the Vietnam war. In a recent article in the New York Times the two discuss Wikileaks and free speech.

The two praise Wikileaks for having publicly revealed many of the uglier aspects of U.S. government actions. They also praise Ecauador's decision to grant asylum to Julian Assange long associated with Wikileaks.

The article points out that the Wikileaks releases included footage such as the Apache helicopter attack in Baghdad in which a number of civilians seemed to be killed without good reason. Releases also showed some of the details of the Iraq and Afghanistan wars that both the U.S. and other foreign governments would wish to remain hidden. An example that comes to my mind is the revelation that Pakistani authorities agreed to drone strikes.

Another revelation was the U.S. collusion with then President Saleh in Yemen to disguise the fact that the U.S. was responsible for bombing attacks. Leaks also reveal that Obama put pressure on other countries not to prosecute Bush-era officials for torture.

The U.S. response to these revelations, the article claims, has been ferocious. Leaders from both parties have called Assange a type of high-tech terrorist. The California Democrat Dianne Feinstein has demanded he be tried under the Espionage Act. Actually the article mentions only a few aspects of the reaction. Pressure was put on financial institutions to deny Wikileaks services a move that had the effect of drastically reducing donations.

Although Assange has yet to be charged with any crime an international warrant for his arrest was obtained. Assange voluntarily gave himself up but attempts to fight extradition failed.

Assange has asked several times that Swedish authorities come to Britain and question him there. This offer has never been accepted. I really do not understand why. The article mentions that Swedish authorities have traveled other countries on occasion to question suspects. The fact that Sweden insists that Assange travel to Sweden gives some credence to the view that Sweden is simply a way station on the way to facing charges in the U.S. The article points out another fact that points in the same direction.

Assange claims he would travel to Sweden if Sweden promised that it would not extradite Asssange to the U.S. Again, Sweden refuses to make any such commitment. The U.K. also has the power to pledge that Assange would not be extradited to the U.S. and also refuses to pledge this. Ecuador tried to obtain these pledges as a means of resolving the standoff and sending Assange to Sweden.

While officials deny any plan to ask for extradition of Assange a Grand Jury has been empowered in the U.S. and is investigating possible charges to be made against him. Surely this implies that the U.S. wants to gain custody of Assange. Here is a quote from The Age:

However, the Australian embassy in Washington reported in February that "the US investigation into possible criminal conduct by Mr Assange has been ongoing for more than a year".

The embassy noted media reports that a US federal grand jury had been empanelled in Alexandria, Virginia, to pursue the WikiLeaks case and that US government officials "cannot lawfully confirm to us the existence of the grand jury".

Despite this, and apparently on the basis of still classified off-the-record discussions with US officials and private legal experts, the embassy reported the existence of the grand jury as a matter of fact. It identified a wide range of criminal charges the US could bring against Assange, including espionage, conspiracy, unlawful access to classified information and computer fraud.

As with many other actions that the U.S. does not want the public to have any information about such as drone strikes the government refuses to admit or deny the existence of this Grand Jury even though everyone knows that it exists! What is important is not so much the fate of Assange but the fate of organizations who attempt to inform the public about what governments are doing. Governments classify much that is not so much a matter of national security but a matter of misdeeds that the government wants to hide from the public.

A man and his wife were not allowed to board a Delta Airlines flight from Buffalo-Niagara airport because their satirical T-shirts supposedly made crew and passengers very uncomfortable.

Arijit Guha 31 is a doctoral student at Arizona State University. He has advanced colon cancer and has undergone extensive surgery and chemotherapy which ended up costing $118,000 more than the $300,000 cap on his student health plan, expenses that his insurer Aetna would not cover.

Guha managed to draw the CEO of Aetna Mark T. Bertolini into a heated exchange on Twitter and as the video appended shows Guha won out in the end and even won a victory for the student health plan. The usually caustic and sarcastic Guha in the end had nothing but praise for Mr. Bertolini. Guha is no stranger to controversy and he seems to enjoy being provocative. He has no praise for the TSA(Transportation Security Agency)

Guha and his wife were about to board a plane at the Buffalo-Niagara airport. They passed through security with no problem. However, he was then approached by a Delta agent who told him that his T-shirt was making passengers nervous. The offending T-shirt has a TSA logo together with text that satirizes what Guha considers the agencies paranoid and overbearing security stance.

TSA agents questioned Guha about the significance of his T-shirt. He explained that it was mocking the manner in which the TSA approached security and over-reaction by them and the public to the threat of terrorism. Ironically what was happening to Guha and his wife was a perfect exemplification of his point!

Guha was then informed that if he took off the offending shirt and again had their belongings searched they could board the flight. Guha agreed. Just as they were about to board the plane he was pulled aside again by not only a Delta supervisor but three TSA agents and several Niagara Frontier Transportation Authority police as well. There was no SWAT team however.

He and his wife were questioned again. Their bags were searched anew, the offending shirt was photographed, and they were asked multiple questions. This was all to no avail as the pilot of the plane insisted that the presence of Guha and his wife would cause discomfort to other passengers. The T-shirt text was obviously not really a satire just the plain truth.

Guha and his wife were subject to even further interrogation. Some of the questions were quite inappropriate. There is much more detail on Guha's own blog. Guha and his wife had to find overnight accommodations at their own expense and flew out the next morning at 7 AM. The TSA was kind enough not to put them on the no-fly list. Yet!

Tuesday, August 21, 2012

While many in the west take sun tans as a sign of health and beauty in Asia many consider the tan a sign of being lower class or a laborer. The face-kini shields the face from being tanned. As an added bonus it keeps off insects and even jelly fish!

In Qingdao in Northeast China the beaches are famous and it is now the height of the tourist season. Many in Asia do not like to tan and associate lighter skin color with beauty.

My wife is from the Philippines. When I lived in the Philippines for a year I was surprised that at the beach many avoided the sun as much as they could rather than using sunblock and soaking up the sun. In the stores there were many different soaps that promised to lighten the color of your skin. Back in Canada tanning salons entice white-skinned northerners with no time or opportunity to tan on beaches to pay to artificially create the appearance of having been on a Caribbean holiday.

The face-kini looks very much like a ski mask or balaclava. One might think that followers of the Punk Band Pussy Riot had invaded China. The cloth is much lighter than that of a ski mask naturally otherwise the face-kini would be intolerably hot. The face-kini costs about four dollars U.S. or less and is often paired with a long sleeved shirt that keeps the sun off the arms as well. There is nothing very bikini-like in the Chinese bathing outfits.

Todd Akin the Republican Senate nominee for Missouri has created a storm of controvery with his remarks on rape and pregancy. Atkin claimed that pregnancies from rape are quite rare since :“If it’s a legitimate rape, the female body has ways to try to shut that whole thing down.” His choice of the word "legitimate" is itself controversial. Perhhaps he meant to distinguish between an actual rape and a false claim of being raped. Akin claimed the sources of his information were doctors but he did not identify them.

The Center for Disease Control cites a study that estimates 32,101 pregnancies result from rape each year. This is a rather strange estimate. An estimate should surely be a more rounded number such as 32,000! Anyway if the estimate is in the ball park aboutk 5 per cent of raped women become pregnant. This is not exactly rare I should think and the absolute number is rather large. In any event for the individual involved the numbers who face the same situation is less relevant than the choices available to her.

Even though the position is not supported by the facts several politicians opposed to abortion have voiced the same opinion as Akin. In 1988 in Arkansas Dr. Fay Boozman a Republican Canidate for Senate said that hormones generated by fear usually prevented rape victims from getting pregnant. The doctor an ophthalmologist claimed he learned his facts from anecdotal information and his own medical residency. Although he lost his election gamble Dr. Boozman was appointed to run the Arkansas Dept. of Health by then Governor Mike Huckabee.

Back in 1995 a Republican member of the North Carolina state legislature dentist Henry Aldridge said in a debate:: “The facts show that people who are raped — who are truly raped — the juices don’t flow, the body functions don’t work and they don’t get pregnant.” In further explanation of his remarks “To get pregnant, it takes a little cooperation. And there ain’t much cooperation in a rape.”

The view adopted by a number of politicians is not at all new. In fact medical historian Vanessa Heggie notes: “The legal position that pregnancy disproved a claim of rape appears to have been instituted in the U.K. sometime in the 13th century,” One of the UK's earliest legal text written about the end of the thirteenth century said: “If, however, the woman should have conceived at the time alleged in the appeal, it abates, for without a woman’s consent she could not conceive.” Ms. Heggie notes that the view that a woman had to have an orgasm in order to conceive was apparently widespread in popular thought as well as medical literature in both the medieval and early modern period. Ms. Heggie might add that it is also still prevalent among a few politicians in the twenty-first century. For more see this article.

Several studies show that those with very high incomes give a smaller percentage of their income to charity than those with lower incomes.

No doubt some of the wealthy give a hefty percentage of their wealth to charity. Bill Gates, Warren Buffett and 38 others among the very rich formed a pact to donate at least half of their wealth to charity. However, statistics show that on average the wealthy do not donate as high a percentage of their income to charity as the less well off.

Judith Warner in the New York Times reports that Americans who earn less than $25,000 a year donate 4.2% of their income on charity on average. On the other hand those who earn more than $75,000 give only 2.7%.

Households that earn between $50,000 U.S. and $75,000 a year, on average, give 7.6% of there post-tax and post-living expenses income to charities. Households earning $200,000 a year or more donate only 4%. However, people with high incomes who live close to people with low incomes give more than those with high incomes who live in isolated wealthy area according to a report on NPR.

According to another study by the Chronicle of Philanthropy that analyzed charitable donations as related to ZIP codes, only nine of 1,000 most generous areas were among the richest 1,000 ZIP codes. The study also noted that in areas where rich people were highly concentrated giving in terms of income percentage was quite low.

The report found that in neighborhoods where more than 40 percent of taxpayers reported earning $200,000 or more, the average giving was just 2.8 percent of discretionary income.

In 1906 ZIP code areas where at least 10 taxpayers earned $200,000 or more none of those taxpayers reported giving to charity! Almost eighty per cent of those areas were outside metropolitan areas indicating that the residents may not have had much contact with problems of the poor. Actually there is often plenty of poverty in rural areas as well. Buffett and Gates are the exceptions rather than the rule when it comes to charity among the rich.

Monday, August 20, 2012

Several banks including Barclays of the UK and Santander of Spain are expected to press for fees for banking accounts at a meeting of the UK Parliamentary Commission on Banking Standards. Barclay was recently found guilty of involvement in LIBOR fixing.

The LIBOR (London Interbank Offered Rate) is an average interest rate estimated by leading banks that would be charged for inter-bank loans The rate is used as a bench mark for short term interest rates around the world.

The LIBOR scandal arose when it was discovered that banks had been reporting higher rates than they actually had been charging as a means for increasing the interest rate. The Financial Times published an article reporting that manipulation of the LIBOR had been ongoing since at least 1991. This implies that many people have been paying far more in interest than they should have. About 20 banks have been named in investigations so far.

Barclay's, a large UK bank, admitted that it elevated its rate. The bank paid a 456 million dollar fine and the CEO resigned. At least twelve global banks, including U.S. giants such as the Bank of America, Citigroup, JP Morgan Chase could face fines if found guilty of being involved. Estimates are that the rate hikes could have cost borrowers up to $22 billion U.S.

Now the banks are blaming their criminal action on free bank accounts. Of course many bank accounts are not free. The ones which are usually charge fees for writing checks and many other bank services. Overdraft charges and interest rate can be high. The banks make money by using your money that they loan at interest rates much higher than they pay on deposits. Many accounts do not even pay interest.

Now these cheaters want to press the government to mandate account fees so that they can take even more money from depositors! The CEO of Barclay's , Sir David Walker, obviously wants to recoup the $456 billion fine Barclays paid: He told The Sunday Teleigraph that the LIBOR scandals resulted from not charging for bank accounts. Sir David said:

‘One important barrier to competitive entry into the UK personal banking sector is obvious – the fact that the core product is usually given away for free, sold at below cost of production,’

If that is so it is surely common throughout industry and known as a loss leader. Rather than being a barrier to competition it is a means to compete.